Meta Stock Suffers, As Facebook Loses Daily Users For First Time

Mark Zuckerberg and Meta have a challenge on their hands, after shares plunged more than 20 percent when Facebook posted weaker than expected fourth quarter results.

Although the recently rebranded social networking giant posted an overall “solid quarter” financially speaking, it is clear the group is facing an increasingly challenging environment.

Besides regulatory challenges, Facebook is facing increased competition from the likes of TikTok and YouTube grabbing user (particularly youth) attention, as well as a squeeze of advertising revenue, and Apple’s privacy changes start to impact.

Solid quarter

Digging into the financial results, Meta posted a healthy year-end profit and sales, but fourth quarter results saw a rare decline in profits.

For the fourth quarter ending 31 December, Facebook posted a net profit of $10.3bn, down 8 percent from $11.2bn profit in the same year ago quarter.

Quarterly revenues however rose 20 percent to $33.7bn from $28bn in the same year-ago quarter.

For the full year, Meta posted a net profit up 35 percent at $39.4bn from $29.1bn in 2020.

Annual revenues rose 37 percent $117.9bn from $86bn in the previous year.

Meta for the first time broke out Meta’s Reality Labs, the company’s augmented and virtual reality business, in its results. It showed a net loss of $10.2 billion for the full year 2021, compared with a $6.6 billion loss the previous year.

“We had a solid quarter as people turned to our products to stay connected and businesses continued to use our services to grow,” said Mark Zuckerberg.

“I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse,” said Zuckerberg.

Meta said that Facebook’s daily active users (DAUs) were 1.929 billion on average for December 2021, an increase of 5 percent year-over-year.

But for the first time ever, this 1.929 billion figure was down from 1.930 billion DAUs in the previous quarter.

Facebook monthly active users (MAUs) came in at 2.91 billion, an increase of 4 percent year-over-year.

But 2.91 billion MAUs showed no growth compared with the previous quarter.

Looking ahead, Meta forecast first-quarter revenue in the range of $27 billion to $29 billion. Analysts had been expecting $30.15 billion.

Challenges ahead

And during the earnings call, Meta’s chief financial officer, Dave Wehner, told analysts that the impact of Apple’s privacy changes could be “in the order of $10 billion” for 2022.

Apple’s changes to its operating software give users the choice to prevent apps from tracking their online activity for adverts, making it harder for advertisers that rely on this data to develop new products and know their markets.

Facebook was the most vocal opponent of Apple’s privacy change, and launched an ad campaign in 2020 slamming Apple, claiming the change would be “devastating” to smaller businesses.

Meta’s shares plunged as much as 23 percent in after-hours trading following the report, wiping $200 billion from the market value of Meta.